Todays speakers Nicolas Jimenez, President and CEO Kelly Aimers, - - PDF document

▶
today s speakers
SMART_READER_LITE
LIVE PREVIEW

Todays speakers Nicolas Jimenez, President and CEO Kelly Aimers, - - PDF document

Dec 12, 2022 22 likes •398 views

9/4/2018 ICBCs 2018 Basic Insurance Rate Design Application Streamlined Review Process Presentation September 4, 2018 Todays speakers Nicolas Jimenez, President and CEO Kelly Aimers, FCIA, ACAS, Director of Pricing and

slide-1
SLIDE 1

9/4/2018 1

ICBC’s 2018 Basic Insurance Rate Design Application

Streamlined Review Process Presentation September 4, 2018

Today’s speakers

  • Nicolas Jimenez, President and CEO
  • Kelly Aimers, FCIA, ACAS, Director of

Pricing and Regulatory Affairs

  • William T. (Bill) Weiland, FCIA, FCAS,

Eckler (External actuary)

2

slide-2
SLIDE 2

9/4/2018 2

Agenda

3

  • Opening Remarks – Key points
  • Background & Current Rate Design
  • Explaining the New Rate Design
  • Customer Impacts – Examples
  • External Actuaries’ Assessment
  • Change Management and Looking Forward
  • Closing Remarks
  • Questions

OPENING REMARKS

4

slide-3
SLIDE 3

9/4/2018 3

  • ICBC is applying for BCUC approval of a

new Basic insurance rate design, as set

  • ut in a government direction on

August 3, 2018

  • Rate design, simply put, is about

allocating Basic insurance costs among customers in a revenue neutral way

Opening Remarks – Key points

5

  • Current rating framework has been in

place for many years

  • This application proposes a major re-

design to improve fairness in BC’s insurance system

Opening Remarks – Key points

6

slide-4
SLIDE 4

9/4/2018 4

  • The new Basic insurance rate design

improves fairness by…

  • being data driven
  • aligning premiums more closely with risks

associated with driving record and experience

  • incorporating some directed policy overlays

addressing affordability

Opening Remarks – Key points

7

  • Highlights of new rate design:
  • 2/3 better off vs. current design
  • lower risk drivers pay less (experienced with

no at-fault crashes)

  • higher risk drivers pay more (inexperienced,

those with at-fault crashes)

  • seniors better off overall
  • transition plan to manage impacts
  • little impact on fleet, garage and taxis

Opening Remarks – Key points

8

slide-5
SLIDE 5

9/4/2018 5

  • ICBC is undertaking major change

management effort

  • focuses on customers, brokers, employees and
  • thers
  • uses full range of traditional and digital

communication channels

  • includes monitoring

Opening Remarks – Key points

9

BACKGROUND & CURRENT RATE DESIGN

10

slide-6
SLIDE 6

9/4/2018 6

  • Rate design is part of broader

government plan to address challenges in BC’s auto insurance system

  • August 9 announcement directed ICBC

to seek BCUC approval of Tariff to achieve listed objectives

  • Special Direction IC2 requires BCUC to

recognize and accept directed actions

  • Application seeks BCUC approval for

the same Tariff pages, subject to errata

Background – Government announcement and direction

11

  • Rate design = who pays what portion of

ICBC’s costs of providing universal compulsory vehicle insurance

  • How the cost “pie” is allocated, not determining

the size of the “pie” (revenue requirements)

Background – What is rate design?

12

slide-7
SLIDE 7

9/4/2018 7

  • Application, therefore, does not address:
  • whether general rate increases/decreases are

warranted

  • cost of processing and paying out claims
  • initiatives underway to control costs
  • Optional insurance (an unregulated, competitive

product)

Background – What is rate design?

13

  • At a high level, ICBC approaches rate

design by considering…

  • risks presented by various policies, as assessed

by actuaries

  • policy overlays directed by government

Background – What is rate design?

14

slide-8
SLIDE 8

9/4/2018 8

  • Current rating framework has been in

place for many years

  • Some design challenges…
  • impact of crashes
  • few rating variables
  • crashes follow vehicle, not driver
  • distinguishing risk

Background – Current Rate Design

15

EXPLAINING THE NEW RATE DESIGN

16

slide-9
SLIDE 9

9/4/2018 9

Driver Penalty Point Premium (DPP) and Driver Risk Premium (DRP)

17

  • Stand-alone programs billed

even if person does not insure a vehicle

  • Payable by driver not RO

Government Directive:

  • 20% Nov. 1, 2018
  • 20% Nov. 1, 2019
  • Follows general

rate change order after PY 2020

  • Tariff, Schedule E
  • Basic premium will be determined by

three categories of rating factors

  • Vehicle Factors
  • Driver Factors
  • Discounts / Add-ons
  • Application shows the more complex

rating algorithm for transparency, but most people are only impacted by portions of it

New Rate Design

18

slide-10
SLIDE 10

9/4/2018 10

19

Advanced Safety Technology Factor Disability Discount Factor Base Rate $1000 High Value Vehicle Factor

=

* Transition Factor Distance Factor Individual Driver Factor Senior Driver Factor Driver 1…n Unlisted Driver Accident Premium Certificate Premium Rate Class and Territory Factor Combined Driver Factor * * * Learner Premium

+ + +

Unlisted Driver Premium Protection

=

Experience Factor Multiple CCP Factor New Resident Driver Factor Experience Adjustment Factor * * * * * * *

Base Rate:

  • Starting point for algorithm
  • Expressed as a dollar amount
  • Initially set at $1,000
  • Will change with the general

rate change order approved by the Commission beginning with 2019 PY

Government Directive: Basic Insurance Tariff (Tariff), Section 1; Base Rate means $1,000

VEHICLE FACTORS

20

slide-11
SLIDE 11

9/4/2018 11

21

Advanced Safety Technology Factor Disability Discount Factor Base Rate $1000 High Value Vehicle Factor

=

* Transition Factor Distance Factor Individual Driver Factor Senior Driver Factor Driver 1…n Unlisted Driver Accident Premium Combined Driver Factor * * * Learner Premium

+ + +

Unlisted Driver Premium Protection

=

Experience Factor Multiple CCP Factor New Resident Driver Factor Experience Adjustment Factor * * * * * * *

Rate Class and Territory Factor:

  • Same structure as today (no changes

to territory boundaries)

Government Directive:

  • Reflect loss data
  • Accepted actuarial

practice

  • 10 years
  • Taxis excluded
  • Tariff; Schedule C
  • Actuarial based / data

driven

  • Impact transitioned over

10 years

Certificate Premium Rate Class and Territory Factor

22

22

Rate Territories Annual Territory Adjustment Only Total Impact over 10 years

Lower Mainland +1.0% +10.9% Maple Ridge/Pitt Meadows

  • 0.2%
  • 1.8%

Squamish/Whistler

  • 3.1%
  • 26.8%

Pemberton/Hope

  • 0.7%
  • 6.9%

Fraser Valley

  • 0.2%
  • 2.1%

Thompson/Okanagan

  • 1.4%
  • 13.0%

Kootenays

  • 3.1%
  • 26.9%

Cariboo

  • 4.7%
  • 38.0%

Prince George

  • 3.5%
  • 30.1%

Northern Coast

  • 4.1%
  • 34.3%

Peace River

  • 5.0%
  • 40.1%

Southern Vancouver Island and all other islands

  • ff the west cost of the mainland

+0.7% +7.6% Middle Vancouver Island/Sunshine Coast

  • 0.9%
  • 8.4%

Northern Vancouver Island

  • 3.1%
  • 26.8%

Advanced Safety Technology Factor Disability Discount Factor Base Rate $1000 High Value Vehicle Factor

=

* Transition Factor Distance Factor Individual Driver Factor Senior Driver Factor Driver 1…n Unlisted Driver Accident Premium Combined Driver Factor * * * Learner Premium

+ + +

Unlisted Driver Premium Protection

=

Experience Factor Multiple CCP Factor New Resident Driver Factor Experience Adjustment Factor * * * * * * * Certificate Premium Rate Class and Territory Factor

slide-12
SLIDE 12

9/4/2018 12

23

23

Rate Classes Annual Rate Class Adjustment Only (%) Total Impact over 10 years

Pleasure Use Only 0.4% 3.9% Short Commute

  • 0.1%
  • 1.1%

Long Commute 0.7% 6.7% Motorhome

  • 5.7%
  • 44.2%

Motorcycle

  • 4.0%
  • 33.2%

Collectors

  • 1.5%
  • 13.7%

Business Use 0.4% 4.2% Light Commercial

  • 0.6%
  • 6.0%

Heavy Commercial

  • 1.7%
  • 16.0%

Taxis 0.0% 0.0% Long Haul Delivery

  • 3.7%
  • 31.2%

Buses

  • 1.7%
  • 15.6%

Advanced Safety Technology Factor Disability Discount Factor Base Rate $1000 High Value Vehicle Factor

=

* Transition Factor Distance Factor Individual Driver Factor Senior Driver Factor Driver 1…n Unlisted Driver Accident Premium Combined Driver Factor * * * Learner Premium

+ + +

Unlisted Driver Premium Protection

=

Experience Factor Multiple CCP Factor New Resident Driver Factor Experience Adjustment Factor * * * * * * * Certificate Premium Rate Class and Territory Factor

DRIVER FACTORS

24

slide-13
SLIDE 13

9/4/2018 13

25

Advanced Safety Technology Factor Disability Discount Factor Base Rate $1000 High Value Vehicle Factor

=

* Transition Factor Distance Factor Senior Driver Factor Driver 1…n Unlisted Driver Accident Premium Certificate Premium Rate Class and Territory Factor Combined Driver Factor * * * Learner Premium

+ + +

Unlisted Driver Premium Protection

=

Experience Factor Multiple CCP Factor New Resident Driver Factor Experience Adjustment Factor * * * * * * *

Combined Driver Factor (CDF):

  • Replaces CRS
  • Registered owners asked to list drivers

Government Directive:

  • Consider all drivers
  • If >1 driver,

PD=75%, next highest risk=25%

  • Tariff; Section 2,

Schedule D

Individual Driver Factor

  • Each listed driver is assigned

an Individual Driver Factor (IDF)

  • The combination of IDF’s is

used in determining premium: 75% PD; 25% highest risk

26

Advanced Safety Technology Factor Disability Discount Factor Base Rate $1000 High Value Vehicle Factor

=

* Transition Factor Distance Factor Individual Driver Factor Senior Driver Factor Driver 1…n Unlisted Driver Accident Premium Certificate Premium Rate Class and Territory Factor * * * Learner Premium

+ + +

Unlisted Driver Premium Protection

=

Experience Factor Multiple CCP Factor New Resident Driver Factor Experience Adjustment Factor * * * * * * *

Individual Driver Factor (IDF):

Government Directive:

  • ≤ 40 yrs licensed
  • 10 yr crash history
  • 65+ yrs discount
  • New resident rules
  • Adjust to Exp table
  • Tariff; Schedule D
  • The IDF account for:
  • Years of experience
  • Crash history
  • Senior status
  • New resident status

Combined Driver Factor

slide-14
SLIDE 14

9/4/2018 14

27

Advanced Safety Technology Factor Disability Discount Factor Base Rate $1000 High Value Vehicle Factor

=

* Transition Factor Distance Factor Individual Driver Factor Senior Driver Factor Driver 1…n Unlisted Driver Accident Premium Certificate Premium Rate Class and Territory Factor Combined Driver Factor * * * Learner Premium

+ + +

Unlisted Driver Premium Protection

=

Experience Factor Multiple CCP Factor New Resident Driver Factor Experience Adjustment Factor * * * * * * *

Experience Factor: Years Licensed

  • Total years licensed; max of 40 years
  • Data driven analysis – AAP

Government Directive:

  • ≤ 40 yrs licensed
  • Accepted actuarial

practice

  • Tariff; Section 2,

Schedule D

  • Comparison between CRS

(blue line) and EF (orange line) is before any policy

  • verlays

28

Advanced Safety Technology Factor Disability Discount Factor Base Rate $1000 High Value Vehicle Factor

=

* Transition Factor Distance Factor Individual Driver Factor Senior Driver Factor Driver 1…n Unlisted Driver Accident Premium Certificate Premium Rate Class and Territory Factor Combined Driver Factor * * * Learner Premium

+ + +

Unlisted Driver Premium Protection

=

Experience Factor Multiple CCP Factor New Resident Driver Factor Experience Adjustment Factor * * * * * * *

Experience Factor: Years since last At- Fault Crash

  • Scan period: 10 year scan period
  • Transition starting at March 1, 2017, increasing

annually to 2027

  • Forgiveness
  • 20 yrs experience and 10 yrs

crash free

  • Claim repayment ≤ $2,000

Government Directive:

  • 10 yr crash history
  • Most commercial

not affect personal

  • Forgiveness &

repayment rules

  • Tariff; Section 2,

Schedule D (Tb 1)

slide-15
SLIDE 15

9/4/2018 15

29

Advanced Safety Technology Factor Disability Discount Factor Base Rate $1000 High Value Vehicle Factor

=

* Transition Factor Distance Factor Individual Driver Factor Senior Driver Factor Driver 1…n Unlisted Driver Accident Premium Certificate Premium Rate Class and Territory Factor Combined Driver Factor * * * Learner Premium

+ + +

Unlisted Driver Premium Protection

=

Experience Factor Multiple CCP Factor New Resident Driver Factor Experience Adjustment Factor * * * * * * *

Experience Adjustment Factor:

  • Adjustment to actuarially indicated rates
  • Address affordability for new drivers

Government Directive:

  • Affordability
  • Apply a factor

based on Table A in Attachment 1

  • Tariff; Section 2,

Schedule D (Tb 5)

  • Favourable adjustment for

drivers < 15 years, however reduces if at-fault crashes:

  • 50% if one at-fault crash in 5 yrs
  • 100% if two in 5 yrs

30

Advanced Safety Technology Factor Disability Discount Factor Base Rate $1000 High Value Vehicle Factor

=

* Transition Factor Distance Factor Individual Driver Factor Senior Driver Factor Driver 1…n Unlisted Driver Accident Premium Certificate Premium Rate Class and Territory Factor Combined Driver Factor * * * Learner Premium

+ + +

Unlisted Driver Premium Protection

=

Experience Factor Multiple CCP Factor New Resident Driver Factor Experience Adjustment Factor * * * * * * *

CRS (blue line) vs IDF: EF and EAF (purple line) for Crash Free Drivers

  • Does not account for other rating

factors (e.g., senior driver factor)

slide-16
SLIDE 16

9/4/2018 16

31

Advanced Safety Technology Factor Disability Discount Factor Base Rate $1000 High Value Vehicle Factor

=

* Transition Factor Distance Factor Individual Driver Factor Senior Driver Factor Driver 1…n Unlisted Driver Accident Premium Certificate Premium Rate Class and Territory Factor Combined Driver Factor * * * Learner Premium

+ + +

Unlisted Driver Premium Protection

=

Experience Factor Multiple CCP Factor New Resident Driver Factor Experience Adjustment Factor * * * * * * *

Multiple Chargeable Claim Payment Factor:

  • At-fault crashes other than the most recent

(most recent in Experience Factor)

Government Directive:

  • 10 yr crash

history

  • Accepted actuarial

practice

  • Tariff; Section 2,

Schedule D (Tb 2)

  • Replaces exiting Multiple Crash

Premium

  • Based on:
  • Total at-fault crashes
  • Age of crashes (more recent

crashes weighted more heavily)

32

Advanced Safety Technology Factor Disability Discount Factor Base Rate $1000 High Value Vehicle Factor

=

* Transition Factor Distance Factor Individual Driver Factor Senior Driver Factor Driver 1…n Unlisted Driver Accident Premium Certificate Premium Rate Class and Territory Factor Combined Driver Factor * * * Learner Premium

+ + +

Unlisted Driver Premium Protection

=

Experience Factor Multiple CCP Factor New Resident Driver Factor Experience Adjustment Factor * * * * * * *

Senior Driver Factor:

  • Drivers who are/will be at least 65 years old
  • Registered owner is also at least 65 years
  • Pleasure use only
  • 15%; reduces if at-fault crashes

Government Directive:

  • 15% discount
  • 65 yrs or older
  • reduces upon at-

fault crashes

  • Tariff; Section 2,

Schedule D (Tb 3)

Number of At-Fault Crashes Senior Driver Factor 0.850 1 0.925 2+ 1.000

slide-17
SLIDE 17

9/4/2018 17

33

Advanced Safety Technology Factor Disability Discount Factor Base Rate $1000 High Value Vehicle Factor

=

* Transition Factor Distance Factor Individual Driver Factor Senior Driver Factor Driver 1…n Unlisted Driver Accident Premium Certificate Premium Rate Class and Territory Factor Combined Driver Factor * * * Learner Premium

+ + +

Unlisted Driver Premium Protection

=

Experience Factor Multiple CCP Factor New Resident Driver Factor Experience Adjustment Factor * * * * * * *

New Resident Driver Factor:

  • Transfer ≤ 15 yrs OOP driving experience
  • OOP crash and insurance history not required

Government Directive:

  • Transfer ≤ 15 yrs

DL, not crashes

  • Charged for 3 yrs
  • 15% & decreases
  • Tariff; Section 2,

Schedule D

  • New to BC drivers represent

higher level of risk

Years Since BC Experience Start Date New Resident Driver Factor 1.150 1 1.100 2 1.050 3+ 1.000 34

CRS to CDF: Impact of Listing Drivers

Advanced Safety Technology Factor Disability Discount Factor Base Rate $1000 High Value Vehicle Factor

=

* Transition Factor Distance Factor Senior Driver Factor Driver 1…n Unlisted Driver Accident Premium Certificate Premium Rate Class and Territory Factor Combined Driver Factor * * * Learner Premium

+ + +

Unlisted Driver Premium Protection

=

Experience Factor Multiple CCP Factor New Resident Driver Factor Experience Adjustment Factor * * * * * * * Individual Driver Factor

slide-18
SLIDE 18

9/4/2018 18

DISCOUNTS AND ADD-ONS

35 36

Advanced Safety Technology Factor Disability Discount Factor Base Rate $1000 High Value Vehicle Factor

=

* Transition Factor Distance Factor Individual Driver Factor Senior Driver Factor Driver 1…n Unlisted Driver Accident Premium Certificate Premium Rate Class and Territory Factor Combined Driver Factor * * * Learner Premium

+ + +

Unlisted Driver Premium Protection

=

Experience Factor Multiple CCP Factor New Resident Driver Factor Experience Adjustment Factor * * * * * * *

Factors Unchanged

Disability Discount Factor:

  • 25% reduction (certain rate classes) for

qualified persons

Government Directive:

  • Tariff; Section 2,

Schedule G

  • Tariff; Section 2,

Section 3

High-Value Vehicle Charge Factor:

  • 2x Basic insurance premium
slide-19
SLIDE 19

9/4/2018 19

37

Advanced Safety Technology Factor Disability Discount Factor Base Rate $1000 High Value Vehicle Factor

=

* Transition Factor Distance Factor Individual Driver Factor Senior Driver Factor Driver 1…n Unlisted Driver Accident Premium Certificate Premium Rate Class and Territory Factor Combined Driver Factor * * * Learner Premium

+ + +

Unlisted Driver Premium Protection

=

Experience Factor Multiple CCP Factor New Resident Driver Factor Experience Adjustment Factor * * * * * * *

  • 10% Discount
  • Vehicles with manufacturer installed

autonomous emergency braking systems

Government Directive:

  • 10% discount for

specific autonomous emergency braking

  • Tariff; Section 2,

Schedule X

  • Technology proven to prevent

crashes from occurring

Advanced Safety Technology Factor:

38

Advanced Safety Technology Factor Disability Discount Factor Base Rate $1000 High Value Vehicle Factor

=

* Transition Factor Distance Factor Individual Driver Factor Senior Driver Factor Driver 1…n Unlisted Driver Accident Premium Certificate Premium Rate Class and Territory Factor Combined Driver Factor * * * Learner Premium

+ + +

Unlisted Driver Premium Protection

=

Experience Factor Multiple CCP Factor New Resident Driver Factor Experience Adjustment Factor * * * * * * *

Distance Factor:

  • 10% if < 5,000 kilometres driven in prior year

Government Directive:

  • 10% discount for

vehicles driven < 5,000 km/year

  • Tariff; Section 2,

Schedule Y

  • Collecting odometer readings

as of August 23, 2018 for certificates effective September 1, 2018

  • Customers eligible for discount

when they renew on or after September 1, 2019

slide-20
SLIDE 20

9/4/2018 20

39

Advanced Safety Technology Factor Disability Discount Factor Base Rate $1000 High Value Vehicle Factor

=

* Transition Factor Distance Factor Individual Driver Factor Senior Driver Factor Driver 1…n Unlisted Driver Accident Premium Certificate Premium Rate Class and Territory Factor Combined Driver Factor * * * Learner Premium

+ + +

Unlisted Driver Premium Protection

=

Experience Factor Multiple CCP Factor New Resident Driver Factor Experience Adjustment Factor * * * * * * *

Learner Premium:

  • Separate charge if insurance certificate

lists learners and non-learners

Government Directive:

  • Years licensed and

at-fault crashes do not affect premium

  • Varies by territory
  • Tariff; Section 2,

Schedule D

  • Premium = $117 adjusted for

territory using pleasure use rate class

  • Only applies once, even if

more than one listed learner driver

40

Advanced Safety Technology Factor Disability Discount Factor Base Rate $1000 High Value Vehicle Factor

=

* Transition Factor Distance Factor Individual Driver Factor Senior Driver Factor Driver 1…n Unlisted Driver Accident Premium Certificate Premium Rate Class and Territory Factor Combined Driver Factor * * * Learner Premium

+ + +

Unlisted Driver Premium Protection

=

Experience Factor Multiple CCP Factor New Resident Driver Factor Experience Adjustment Factor * * * * * * *

Unlisted Driver Accident Premium:

  • RO can choose to list drivers; however

consequences if their unlisted driver cause a crash

  • Coverage not breached

Government Directive:

  • 15x difference in

premium ($5,000 max) if unlisted driver causes crash

  • Tariff; Section 2,

Schedule AA

  • One-time charge of 15x premium

differential if unlisted driver with a valid BC DL; $250 if OOP

  • Exception for medical emergency
slide-21
SLIDE 21

9/4/2018 21

41

Advanced Safety Technology Factor Disability Discount Factor Base Rate $1000 High Value Vehicle Factor

=

* Transition Factor Distance Factor Individual Driver Factor Senior Driver Factor Driver 1…n Unlisted Driver Accident Premium Certificate Premium Rate Class and Territory Factor Combined Driver Factor * * * Learner Premium

+ + +

Unlisted Driver Premium Protection

=

Experience Factor Multiple CCP Factor New Resident Driver Factor Experience Adjustment Factor * * * * * * *

Unlisted Driver Protection Premium:

  • Protects from Unlisted Driver Accident

Premium if unlisted driver has at-fault crash

Government Directive:

  • Coverage to be

provided to protect customers from UDAP charge

  • Tariff; Section 2,

Schedule AA

  • Exceptions to coverage

(incidental driver, household, employee, etc.)

  • Increases with at-fault crashes

Number of At-Fault Crashes Premium $50 1 $100 2 $250 3 $500 4 $1,000 5 or more $1,500

TRANSITION AND REVENUE NEUTRALITY

42

slide-22
SLIDE 22

9/4/2018 22

43

Advanced Safety Technology Factor Disability Discount Factor Base Rate $1000 High Value Vehicle Factor

=

* Transition Factor Distance Factor Individual Driver Factor Senior Driver Factor Driver 1…n Unlisted Driver Accident Premium Certificate Premium Rate Class and Territory Factor Combined Driver Factor * * * Learner Premium

+ + +

Unlisted Driver Premium Protection

=

Experience Factor Multiple CCP Factor New Resident Driver Factor Experience Adjustment Factor * * * * * * *

Transition Factor:

  • Compared to prior policy year premium,

increase will be ≤ 20% increase for renewals

Government Directive:

  • Renewals ≤20%

increase over prior year, with exceptions

  • Tariff; Section 2,

Schedule Z

  • Excludes impacts of changes in

rate class, territory and learner premium

  • Not applicable if PD changes or

drivers used in premium have at-fault crash after Sept. 1, 2019

44

Advanced Safety Technology Factor Disability Discount Factor Base Rate $1000 High Value Vehicle Factor

=

* Transition Factor Distance Factor Individual Driver Factor Senior Driver Factor Driver 1…n Unlisted Driver Accident Premium Certificate Premium Rate Class and Territory Factor Combined Driver Factor * * * Learner Premium

+ + +

Unlisted Driver Premium Protection

=

Experience Factor Multiple CCP Factor New Resident Driver Factor Experience Adjustment Factor * * * * * * *

Transition Factor (continued):

  • Affects approximately 7% of customers
  • Most customers exit transition within 3 years

Government Directive:

  • Renewals ≤20%

increase over prior year, with exceptions

  • Tariff; Section 2,

Schedule Z

  • Minimum CDFs:
  • Maintain revenue neutrality by

capping decreases

  • Cap decreases over 3 years

Certificate Effective Dates Minimum CDF Senior Minimum CDF

  • Sept. 1, 2019 – Aug.31, 2020

0.540 0.415

  • Sept. 1, 2020 – Aug. 31, 2021

0.510 0.410

  • Sept. 1, 2021 – Aug. 31, 2022

0.480 0.405

slide-23
SLIDE 23

9/4/2018 23

Revenue Neutrality:

  • Changes must be revenue neutral for 12

months except for DPP and DRP changes

45

Government Directive:

  • Revenue neutral

for 12 months

  • Compares premium before and

after rate design changes

  • verall changes lead to less

premium collected

  • therefore need off balance factors

Total Premium: Current RD

Total Premium: New RD Prior to OBF

Revenue Neutrality (continued):

46

Government Directive:

  • Revenue neutral

for 12 months

  • Off Balance Factors:
  • 1.005 applied to RC/T (ASTF

, DF, Learner)

Total Premium: Current RD Total Premium: New RD including OBF

  • 1.151 applied to EF (SDF,

Forgiveness, Transition Crash Scan, Repayment)

  • Minimum CDF
  • Forecasting exercise; any

variance will be reflected through RRA

slide-24
SLIDE 24

9/4/2018 24

CUSTOMER IMPACTS – EXAMPLES

47 48

Year One Financial impact (based on today’s rates)

For personal and business (non-fleet) customers if implemented today

New Rate Design: Overall Impact

slide-25
SLIDE 25

9/4/2018 25

49

New Rate Design: Overall Impact

Government Directive:

  • <35% experience

premium increase (excluding general rate change order

  • r changes to DPP

and DRP) Impacts of proposed changes (Yr 1) including transition cap and impact of minimum CDF

50

Drivers who don’t cause crashes Greatest decrease Seniors Some would see a decrease Rate class Could see increase or decrease Territory Could see increase or decrease Inexperienced drivers Would see increase Drivers who do cause crashes Greatest increase

Impacts of proposed changes for British Columbians

New Rate Design: Overall Impact

slide-26
SLIDE 26

9/4/2018 26

EXAMPLES

51 52

Inexperienced Driver No At-Fault Crashes: Current vs New Rate Design

William – 3 years experience

YEARS EXP

No at-fault crashes Lives in Richmond Drives for pleasure No eligible discount or add-ons Basic insurance based on today’s rates Currently pays $1,608 Under the new rate design would pay $1,706

slide-27
SLIDE 27

9/4/2018 27

53

Inexperienced Driver: Current Rate Design

YEARS EXP

Base Rate Premium (RC&T) = $1,892

=

*

Certificate Premium $1,608 Claims Rated Scale = 0.85

William – 3 years experience today

YEARS EXP

No at-fault crashes Lives in Richmond (Territory D) Drives for pleasure (Rate Class 001) No eligible discount or add-ons Basic insurance based on today’s rates Currently pays $1,608 Under the new rate design would pay $1,706

54

Inexperienced Driver: New Rate Design

YEARS EXP

Base Rate Premium = $1,000

=

*

Certificate Premium $1,706 Rate Class Terr Factor = 1.925

*

CDF = 0.886 (11%) EF = 1.174

=

*

IDF = 0.886 (11%) EAF = 0.755

* William – 4 years experience today

YEARS EXP

No at-fault crashes Lives in Richmond (Territory D) Drives for pleasure (Rate Class 001) No eligible discount or add-ons Basic insurance based on today’s rates Currently pays $1,608 Under the new rate design would pay $1,706

slide-28
SLIDE 28

9/4/2018 28

55

Senior Driver One Forgiven At- Fault Crash: Current vs New Rate Design

Example based on today’s rates Bob – 50 years experience

Crash-free Lives in Campbell River Drives for pleasure Senior discounts applied Basic insurance based on today’s rates Currently pays $617 Under the proposed changes will pay $601

Other listed driver Mary – 50 years experience 25%

YEARS EXP

75%

2 at- fault crashes (1 and 3 years ago) Senior discount applied

56

Senior Driver: Current Rate Design

Bob – 50 years experience

Crash-free Lives in Campbell River (Territory Y) Drives for pleasure (Rate Class 005) Senior discounts applied Basic insurance based on today’s rates Currently pays $617 Under the proposed changes will pay $601

Other listed driver Mary - 50 years experience

YEARS EXP

Base Rate Premium (RC&T) = $1,082

=

*

Certificate Premium $617 Claims Rated Scale = 0.57 (43%) Includes 25% senior discount

2 at- fault crashes (0 and 2 years ago) Senior discount applied

slide-29
SLIDE 29

9/4/2018 29

57

Senior Driver: New Rate Design

Bob – 51 years experience today

Crash-free Lives in Campbell River (Territory Y) Drives for pleasure (Rate Class 001) Senior discounts applied Basic insurance based on today’s rates Currently pays $617 Under the proposed changes will pay $601

Other listed driver Mary - 51 years experience today 25% 75%

Base Rate Premium = $1,000

=

*

Certificate Premium $601 Rate Class / Terr Factor = 1.410

*

CDF = 0.427 (58%) EF = 0.338

=

*

IDF Bob = 0.355 (65%) Senior Factor = .85 * EAF = 1.235

*

EF = 0. 561

=

*

IDF Mary = 0.641 ( 36%) Senior Factor = .925

* EAF = 1.235

75% 25%

2 at- fault crashes (1 and 3 years ago) Senior discount applied

58

Experienced Driver No At-Fault Crashes

Example based on today’s rates

Key factors affecting premium:

  • Crash - free
  • Territory
  • Use
  • Experience
slide-30
SLIDE 30

9/4/2018 30

59

Key factors affecting premium:

  • Crash
  • Territory
  • Use
  • Experience

Experienced Driver One At-Fault Crash

Example based on today’s rates Jasmine

YEARS EXP

30

Two at-fault crashes – one waived with one-crash forgiveness Lives in Fort St. John Drives for pleasure use No eligible discount or add-ons Basic insurance based on today’s rates Currently pays $704 Premium on renewal with crashes $704 Under the proposed changes with crashes $811

60

Key factors affecting premium:

  • Crash
  • Territory
  • Use
  • Experience

Inexperienced Driver Two At-Fault Crashes

Example based on today’s rates Mike

Two at-fault crashes Lives in Kelowna Drives to and from work less than 15km No eligible discount or add-ons Basic insurance based on today’s rates Currently pays $799 Premium on renewal with crashes $841 Under the proposed changes with crashes $947

YEARS EXP

15

slide-31
SLIDE 31

9/4/2018 31

61

Family or Small Business (non-fleet)

Example based on today’s rates Emma

No at-fault crashes Lives in Surrey Drives to and from work less than 15 km No eligible discount or add-ons Basic insurance based on today’s rates Currently pays $1,094 Under the proposed changes will pay $1,294

YEARS EXP

20

75%

Example based on today’s rates

Other drivers listed

Zack

5 years experience & one at-fault crash

25%

Mick

20 years experience & no at-fault crashes

Key factors affecting premium:

  • Listing Drivers (with at

fault crash)

  • Territory
  • Use
  • Experience

EXTERNAL ACTUARIES’ ASSESSMENT

62

slide-32
SLIDE 32

9/4/2018 32

SUMMARY OF ECKLER REVIEW OF ACTUARIAL MODELS USED IN ICBC’S 2018 RATE DESIGN

Mylène Labelle, FCIA, FCAS William T. Weiland, FCIA, FCAS

Description of engagement

  • Eckler is engaged to provide actuarial services to

ICBC, including predictive analytics

  • In relation to the 2018 Rate Design application,

Eckler was tasked with reviewing the actuarial models developed by ICBC actuaries to ensure they are according to accepted actuarial practice in Canada (AAP)

  • Our work was performed in accordance with AAP.

Section 1530 of the Standards of Practice deals with Review or Repeat of Another Actuary’s Work

64

slide-33
SLIDE 33

9/4/2018 33

Summary of work performed

  • Validation of data used in the Generalized Linear Models

(GLMs)

  • Validation of model assumptions and structure
  • Validation of model results
  • Resolution of of any differences between results of models

replicated by Eckler and those of ICBC’s models

  • Review of implementation, transition and revenue neutrality

65

Conclusions

  • As a result of our work there were no unresolved

differences between the results of ICBC’s models and the results of models Eckler replicated using its

  • wn software.
  • The base rate, combined discount factor, RCT factor,

learner premium, and other discounts and factors are applied properly in the model.

  • The actuarial models built by ICBC as part of the

2018 Rate Design are according to AAP.

66

slide-34
SLIDE 34

9/4/2018 34

CHANGE MANAGEMENT AND LOOKING FORWARD

67

Change Management

68

  • ICBC has a change management strategy

for key stakeholders:

  • Customers
  • Brokers
  • ICBC staff
  • Tailored materials and implementation
  • Also addresses IT impacts
  • Details in Chapter 4 and responses to

BCUC questions

slide-35
SLIDE 35

9/4/2018 35

Change Management Approach

69

Looking forward (post-2019)

  • Government Directive contemplates

September 1, 2019 effective date for most

  • f the new rate design
  • Certain aspects are directed to take effect

in subsequent years (DRP/DPP increase; rate class territory phasing-in)

  • ICBC will be monitoring the results

70

slide-36
SLIDE 36

9/4/2018 36

CLOSING REMARKS

71

Closing Remarks

72

  • ICBC’s respectfully asks that the

Commission approve the proposed rate design, as it reflects the Government Directive

  • New Basic rate design improves

fairness by more closely aligning what customers pay and the risk they pose, while also considering affordability as directed

slide-37
SLIDE 37

9/4/2018 37

QUESTIONS

73